UK Tissue Converter Accrol’s Half Year Results

Accrol has announced the following trading update ahead of its half year results for the six months ended 31 October 2022 ("H1 FY23" or the "Period"), which are scheduled to be released in late January 2023.

The board is pleased to report that the group performed strongly in H1 FY23, delivering substantial growth in volume, revenue and profit, as well as further strengthening its market position. The group continues to demonstrate its resilience against the challenges of input cost inflation, successfully leveraging its supply position with customers to recover all additional costs in the Period.

Net debt at 31 October 2022 was lower than anticipated at c.£30.5m, despite a significant increase in tissue stocks as the group continued to manage uncertainty in its supply chains and the effect of strikes at UK ports. The Group expects this working capital position to improve in H2 FY23 to deliver a further reduction in its net debt position ahead of current market expectations* for FY23.

Highlights:

Revenue up 64 percent to £121.1m (H1 FY22: £73.7m), with volumes increasing by 14 percent in the Period
Accrol's market share by volume increased further to c.21.5 percent (FY22: 19.5 percent), compared to a flat overall UK market
As announced in the Group's Final Results FY22 in September, private label volumes are now higher than pre-pandemic levels - market share growing at an unprecedented rate against that of the traditional brands (Q1 FY23: 54 percent vs Q1 FY22: 50 percent)
Private label sector has strengthened further since the Final Results and Accrol volumes have continued to grow ahead of overall UK market with private label market share standing at c.46 percent (FY22: 44 percent)

Outlook

The Group's main market, the discount retailers and private label products continue to grow strongly, driven by the cost-of-living crisis.

The Group has delivered substantial growth in the Period and the Board is increasingly confident that the growth trajectory of the business is sustainable. The volume growth in H1 FY23 is expected to continue as consumers move away from high-cost, low-value branded products in search of best-value.

Whilst mindful of the wider economic uncertainties, the group's model is robust, and the Board considers the group to be on track to deliver results for the full year ended 30 April 2023 ("FY23") at least in line with market expectations* with net debt reducing ahead of expectations to c.1.5x EBITDA by the end of FY23 (FY22: 3.0x).

* For the purpose of this announcement, the Group believes market consensus for FY23 to be revenue of £213.5m, adjusted EBITDA of £15.0m, adjusted PBT of £7.1m and net debt of £26.3m.

Gareth Jenkins, CEO of Accrol, said: "We are clearly very pleased with these set of results where we have seen volume growth of 14 percent against a flat overall UK market performance over the same period. We have delivered this by having great quality and value products that meet every consumer's budget. Our strong relationship with the retailers and our robust supply model is ensuring we can continue to deliver a strong set of results in a difficult market environment."

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